Warner's quarterly revenue down 58%
Rapidly eroding CD sales and slower-than-expected digital growth hampered Warner Music Group’s perf in fiscal 2007, as shown in weak fourth-quarter and full-year results announced Thursday.Quarterly net for the music distrib, with a catalog ranging from Josh Groban to Linkin Park to Led Zeppelin, dropped 58% to $5 million, from $12 million in the year-ago period ending Sept. 30. Revenue for the period inched up 2% to $869 million but on a full-year basis revenues slid 4% to $3.4 billion. For the full year, the company swung to a net loss of $21 million from a net profit of $60 million. The numbers, however, were slightly better than Wall Street expectations. The quarterly numbers reflected $9 million in restructuring costs and a $12 million benefit from a Napster settlement with Bertelsmann AG. The year-ago quarter had a $13 million bump from a settlement with Kazaa. Revenue from the dominant recorded-music segment treaded water, growing a shade under 1% to $736 million, but revenue was off slightly when currency exchange rates are factored in. Sales have also been weak overseas, dropping 6% to $340 million in the quarter. Top sellers for the period included James Blunt, Nickelback and Linkin Park. Digital revenue rose 30% for the year, to $460 million, but still comprises just 14% of the company’s total. Chairman and chief exec Edgar Bronfman called 2007, a year in which industrywide CD sales have plummeted 14%, “a year of real challenge in the recorded music industry.” But he stressed that opportunities exist for music companies with a “progressive strategy in place and the passion to get them there.” Warner Music, Bronfman said, would focus on a few core areas in 2008: cost containment, broader offerings for consumers and expanding the business model. Execs also touted the fact that costs related to a massive restructuring announced in May came in at $63 million, below the previously stipulated range of $65 million to $80 million. That upbeat figure, along with the fact that earnings exceeded Wall Street estimates, helped send the stock up 8% to close at $7.73 on more than double average volume. Shares have recovered a bit in recent days after a 30% drop in the first three weeks of November.